Accountability on coal: managing the impacts of a sector in transition

Published date: 15 March 2022

GRI launches new standard to address sustainability challenges facing coal companies

How can a sector that is responsible for 30% of global carbon emissions be held to account for its impacts, including ensuring that coal companies meet growing stakeholder demands for transparency in how they align with the low-carbon transition?

Published today, GRI 12: Coal Sector 2022 is the authoritative, internationally applicable standard for coal organizations to communicate their impacts on the economy, environment and people. GRI is developing new standards to enhance accountability on the issues that matter most within sectors. As demonstrated by coal – which remains a significant source of energy and revenue generation – these issues are often complex and inter-linked, highlighting the urgency of improved reporting.

The Sector Standard for Coal enables comprehensive and comparable disclosure on:

  • How companies respond to climate change mitigation demands, as reflected in the Paris Agreement, including plans to transition away from coal mining.
  • Accountability for social impacts that span human rights issues and the safety and wellbeing of employees and communities – with added focus on assessing risks related to catastrophic incidents, such as tailings facility failure.
  • Measures to effectively manage impacts on the environment and biodiversity, given the coal sector is a major contributor to water, air and soil pollution.
  • Robust reporting on the closure of coal mines and the ways this affects communities and workers, with the focus on how organizations contribute to a just transition.
  • Fulfilling financial obligations and steps to tackle corruption – recognizing coal mining often takes place in developing economies or areas of poverty – including transparency on payments, ownership structures and contracts.

Judy Kuszewski is Chair of the Global Sustainability Standards Board, the independent entity that sets the GRI Standards. She said:

 “It is abundantly clear that, to reach the ambition in the Paris Agreement, an urgent transition away from coal has to be a part of the solution. Indeed, as the UN Secretary-General set out in response to the new assessment from the Intergovernmental Panel on Climate Change, coal and fossil fuels are “choking humanity”.

That is why more scrutiny is needed on the companies that remain in the coal sector, with accountability for their impacts. GRI’s Coal Standard reflects these challenges – not only in terms of climate change and a just transition, but across the full socio-economic and environmental spectrum. From minimizing waste to corruption-free operations, GRI 12 guides companies to deliver comprehensive and comparable reporting.

 Global challenges call for different actions from different sectors. Numerous stakeholders – including investors, governments and civil society – require decision-useful data to assess the sustainability performance of companies. That is why we are growing the family of GRI Standards, with coal now added alongside our Oil and Gas Sector Standard, and more to come soon.”

Applicable for any organization in coal mining, exploration, processing, transport and storage, GRI 12 was developed by a working group that ensures multi-stakeholder and global legitimacy. This expert group includes representatives from the UNEP World Conservation Monitoring Centre, standard setters EITI and SASB, and investment institutions FTSE Russell and S&P Global. The working group emphasized climate change as the most critical issue for the sector, requiring enhanced disclosure.

Anne-Claire Howard, former CEO of Bettercoal and ResponsibleSteel, and a member of the GRI working group, added:

“While it is clear that the world must radically reduce its use of coal, we cannot ignore that coal continues to be consumed. Therefore, we need to home in on the sustainability performance of coal companies and assets, as opposed to simply removing them from investment portfolios. That is why the new GRI Sector Standard for Coal is so important.

 The Standard seeks to reconcile two opposing forces: the unacceptable climate impacts from coal mining, and the broader impacts from the continuation of existing production. Measuring and reducing emissions from mining operations is one aspect, while social issues such as working conditions and labor rights also need to be managed. As such, the way this Standard frames a just transition is highly relevant.”

The project to deliver a Sector Standard for Coal was initiated and approved by the Global Sustainability Standards Board. Prior to finalization, an exposure draft of the Sector Standard underwent a global public comment period last year. GRI 12: Coal Sector 2022 comes into effect for reporting from January 2024, with early adoption encouraged.

An assessment by the International Energy Agency estimates that coal-fired energy generation accounts for 30% of CO2 emissions. While coal’s position in in the global energy mix is diminishing, IEA research finds production is growing in China, India, Australia, Indonesia and South Africa. The outcome of the UN Climate Change Conference (COP26) in November saw agreement by countries to ‘phase down’ (rather than ‘phase out’) use of coal.

GRI Sector Standards will initially cover 40 sectors, starting with those with the highest sustainability impacts. The first completed Sector Standard – for oil and gas – published in October 2021. A Sector Standard for agriculture, aquaculture & fishing is expected to launch this summer, with standards for mining, textiles & apparel, and food & beverage next in the pipeline.

Sector Standards complete GRI’s modular system of reporting. Organizations begin with the Universal Standards, then use the applicable Sector Standard(s) to determine material topics, and report on those using relevant Topic Standards.